House prices fell by 1.3% in September according to the latest data from the Halifax. The decline now stands at 5.2% for the third quarter of 2008, a figure almost identical to the of 5.1% fall in the second quarter, indicating that the decline may be levelling out. Annual house prices are now lower by 12.4% across the country, and the UK average price has returned close to what it was in January 2006, the report says.

The decline in credit availability coupled with the average wage rise to retail price index means it’s more difficult than ever for first-time buyers to get onto the housing ladder, the report added, while house price to earnings ratio is in fact improving which indicates that further improvements could help to restart the market.

Lower interest rates will also help mortgage borrowers and provide a valuable support to the market, the report adds. Others agree – Seema Shah from Capital Economics said: ‘Yesterday’s policy actions are good news for the housing market. Borrowers on variable rate mortgages will benefit from the interest rate cut, while the bank recapitalisation plan should mean that the availability of mortgage finance will increase from current low levels, at least to some degree.’